I'll second Jazz alley (though often it's the heavyweights as opposed to local guys - basically the same circuit as Yoshi's in the Bay Area) so it's not so much a "local guy" type thing and Highway 99 can be good (though sometimes dead - just depends)
there is also the triple door
The showbox can be good (tends to be more rock and popular styles), but again, can be a little more national touring acts
Tractor Tavern can give you more local flavor as well as the Sunset Tavern (are they owned by the same guy??)
Little Red Hen is the dmall country place if that's your thing.
El Corazon is the all-black-inside harder styles (hard rock, punk, etc) place.
I Think the "American String Project" has done it's season but if they are playing, they are really wonderful (no percussion in it though)
Chop Suey can have some interesting shows with some left-of-center color to them
The Crocodile Café may have something going on
michael Shrieve has sort of a standing gig at Tost Lounge
there is also the EMP ("experience Music Project") Museum and performance space (they are associated with KEXP radio) to check out
I wouldn't worry about "grunge" - Seattle really isn't a bunch of grungies slouching around, that was sort of a national media fiction
hell, the Melvins and Cobain were from Aberdeen, not Seattle
(though Soundgarden is named after the NOAA soundgarden just of the Magnuson dog park)
and, yeah, going to don Bennett's is sort of required